Public Bill Committee

[Nadine Dorries in the Chair]

Nadine Dorries: If hon. Members could remain in the same seats throughout the Committee sitting, that would make things much easier for the Clerks and me.

Clause 1  - Probation service reform: Parliamentary approval

Amendment proposed (this day): 51, in clause 1, page 1, line 3, leave out
‘structure of the probation service’
and insert
‘responsibilities of, or Ministry of Justice contracts with, probation trusts.’.—(Jenny Chapman.)

Question again proposed, That the amendment be made.

Nadine Dorries: I remind the Committee that with this we are discussing the following:
New clause 1—Requirement to pilot before tendering for probation services—
‘No national tendering for any probation service shall commence before any proposed restructuring of such services has been the subject of a pilot scheme which is subsequently independently monitored and the results of such monitoring laid before both Houses of Parliament.’.
New clause 2—Requirement to pilot before restructuring probation services—
‘Any proposed restructuring of the Probation Service must first be the subject of an independently evaluated pilot scheme and the proposals should be laid before Parliament and be approved by resolution of both Houses.’.

Alex Cunningham: I welcome you to the Chair, Ms Dorries. [Hon. Members: “Hear, hear!”] Clearly, you are a very popular Chair, judging by that reaction. I am pleased to serve under your chairmanship.
Before the Committee adjourned, the Minister was trying to clarify a statement he had made to the House of Commons about the movement of offenders between risk categories and the potential for offenders yo-yoing between medium and high-risk categories. He appeared to confirm that medium-risk offenders then categorised as high risk would move to the national probation service and, regardless of their progress, remain with that service, I assume, until the end of their supervision. He nods his head in agreement.
The clarification is extremely interesting. For me, it reveals the Government’s own concerns about the volatility in the system and how that will play out as the category of offender changes. More to the point, it reveals that the Government themselves already have considerable reservations about the abilities of the private sector firms to manage offenders, particularly those who exist on the margins of medium and high-risk categories.
Is there already an acceptance by the Government that they are on dodgy territory when it comes to the management by the private sector of those sex offenders, robbers and others who pose a considerable risk to society? Is the Minister accepting that such providers, having failed to rehabilitate a medium-risk offender to such an extent that they are re-categorised as high risk, cannot be trusted or expected to work with such people in the future after the national probation service has set them on the rehabilitation road and their category changes back?
This issue further strengthens the need for Parliament to examine in detail the proposals for the probation service that the Government are forcing through—controversial and inadequate ideas that have not been piloted or proven, and about which, as today’s debate has revealed, the Government themselves already appear to have reservations.
What happens with the payment for the contracting company? Does it simply pick up the fee—perhaps 90% or 95%—for working with the now high-risk offender, give up on the balance having admitted failure and hand the person over to the national probation service? How is the national probation service funded to pick up the people failed by the private sector providers? What does the Ministry of Justice risk register say about the financial impacts of the private sector’s failure? How many offenders does the Minister estimate will move upwards in category, and what capacity issues will there be for the national probation service?

Jeremy Wright: Does the hon. Gentleman believe that under the system as it stands, when someone is re-categorised from medium to high risk, that is a failure of the probation officer currently managing them?

Alex Cunningham: No; there are different factors involved in this. I am sure of that and acknowledge the point the Minister is trying to make, but the fact remains that the person will not just be moving within a particular service. They will be moving from one service provider to another, and there are issues associated with that.
It appears to me that the risk list grows every day, and risk is the all-important factor—risk with offenders, risk with public safety and, I suggest, risk with any good reputation the Government have managed to carve out with their proposals in the Bill. Whatever the Minister says, the Secretary of State is taking a risk with our people and will be left high and dry without any real, legitimate parliamentary mandate, which new clause 1 would have him seek. Countless factors can influence risk, and many of them are not constant.
Payment by results allows the Government to minimise uncertainty by contracting out risk to private sector providers, but to price the outsourcing of risk correctly, the Ministry needs to be able to quantify the risk. That is not straightforward when there is so much churning of offenders between risk categories, making it impossible for those commissioning services to get an accurate measure of the problem.
For example, some high-risk offenders can be considered low risk if they are taking the correct medication or if they have mental health problems that are managed effectively. It is important to recognise from the outset that offenders who are rated low or medium risk are not exclusively those who are convicted of what would be widely deemed lesser offences. Indeed, the system of categorisation is somewhat arbitrary and, as others have said today, those classified as low or medium-risk offenders will include those convicted of domestic violence, burglary, robbery, violence against a person, sexual offences and much more.
Such scope for variation, not to mention inescapable incidences of volatility that result in risk fluctuation, is likely to result in contracts being overpriced or underpriced. That suggests that the very basis on which offenders are to be assigned to the various providers of probation services needs to be re-examined, or at least piloted, taking account of personal circumstances to determine the most suitable route of rehabilitation, rather than grouping offenders by arbitrary categorisation and prescribing a one-size-fits-all solution.
With the steadfastness of private provision in mind, and freedom of information requests revealing that as many as 217,569 of the 250,000 offenders currently supervised by the probation service will be transferred to providers in the private sector, it is not difficult to see that taking such a leap into the unknown without first running a pilot is a huge risk.
It is important to clarify again that the amendment has not been designed to rule out the possibility of incorporating provision of services by the voluntary and private sectors. I take this opportunity to reassert the need to work with the Government and the probation service to design and implement measures to ensure that the cycle of reoffending is broken.
The purpose of new clause 1 is to ensure that prior to being laid before Parliament, the proposed changes are properly piloted for appropriate assessment and scrutiny ahead of approval of any action to roll out changes nationally. That is important, given the significant concern about how the Government’s approach could distort rehabilitation. First and foremost, it is not imprudent to believe that, as with the Work programme, delivery will be dominated by the same firms that dominate such tenders at national level. Those large national providers will find it easiest to risk non-payment, although we have yet to learn the extent of any risk they may take, because the Secretary of State dodges question after question in the House about what proportion of a contract will be subject to the guaranteed fee and what proportion to payment by results. Perhaps the Minister will tell us today.
Are those big organisations equipped to do the work required by the Justice Secretary? I doubt it. Smaller organisations and local charities arguably have a better understanding of local needs and are markedly better connected at that level, having strong local networks. None the less, the smaller organisations are likely to be squeezed out as commissioning for probation services is absorbed centrally by Whitehall, which cannot be aware of the good work of every organisation in every region. Added to that risk is the requirement under a payment-by-results model for providers to put money on the table up front. Sebert Cox, chairman of the Probation Association and the Durham Tees Valley Probation Trust, which covers my constituency, is on the record as saying that such a move is likely to put off smaller charities.
While Ministers and officials express their desire for charities and local organisations to be integral to the delivery of services, very few small voluntary organisations will be able to become involved. They say they do not have the necessary funds, and many are already facing financial pressures as a result of cuts in their budgets and funding streams from elsewhere. That is not to say that a provider, whether local or national, can be confident of obtaining financial reward only if it can achieve reductions in reoffending that are greater than available evidence suggests is achievable. With those national organisations that have won contracts elsewhere having greater resources available to them by virtue of their size and omnipresence in the market for services of all descriptions, I have difficulty foreseeing local voluntary sector organisations being able to be price competitive.
More worrying, given the likely difficulties of cutting reoffending by the amount required to benefit financially, is that the payment-by-results model could encourage providers to cut spending on rehabilitation services. After analysing the Government’s proposed model and considering the potential returns for providers, the Social Market Foundation concluded that it is more viable financially to deliver supervision in the cheapest way possible, allowing reoffending rates to increase by up to 3% in the process and earning money from the fee for service rather than investing in services. Such perverse incentives alone justify piloting the entire payment-by-results model before a national roll-out.
It is difficult to imagine a scenario that does not result in the likes of G4S and Serco stepping into the vacuum. With the proposals for the probation service seeing fewer contracts for areas each covering huge swathes of the country, it is only these large private companies that can realistically absorb the risks involved in contracts of this size. We saw it before with the Work programme, and I dare say we will see it again in probation if the Justice Secretary allows these reforms to go ahead in their current form.
Even the largest charities will struggle to afford to become involved and share their skills and experience, the true value of which cannot be overestimated. As other public services revert to localised commissioning models that were once seen as the supporting structure of the “big society”, it is worth making the point that this reversal of trend sends mixed signals about the Government’s overall direction of travel. There is also a paradox in encouraging probation services to be dominated by large national providers, while the public sector retains responsibility for the highest-risk offenders. The underlying message appears to be that the Justice Secretary does not trust these companies to handle high-risk offenders. So why allow private companies to take responsibility for offenders whom we already know could have been convicted of a multitude of awful crimes, particularly when risk categorisation of one in four offenders is liable to change during the course of supervision?
What about sharing knowledge of what works, as others have already spoken of? Such a payment-by-results model that pits private sector for-profit companies against each other will necessarily discourage sharing such knowledge and could perversely jeopardise improvements in the reoffending rate. Allowing the public sector to incorporate private sector elements, on the other hand, would allow this knowledge to be shared intelligently and the benefits to be shared across probation services nationally, rather than being restricted to isolated geographical pockets.
Given that the Justice Secretary accepts that probation works and that the probation service is doing a good job, the seemingly obvious alternative would be to allow existing trusts to extend their service offerings to those sentenced to less than 12 months. They already possess the necessary experience and expertise. Several probation trusts already work with those convicted and serving a term of less than 12 months. With the lack of evidence to support his plans, coupled with an absence of cost savings through incorporating private sector companies, it is difficult to ignore the distinct impression that the Secretary of State’s determination is derived from an ideological position. Allowing probation services to be contracted out wholesale, without the approval of Parliament, not only risks domination by national private sector providers such as G4S, Serco, Capita and A4e, but also gambles with the probability of cherry-picking, further skewing the entire approach to rehabilitation.
Under a payment-by-results model, providers are incentivised to focus their attention on those offenders deemed easiest to rehabilitate, while parking the most difficult with complex and multiple needs. I need not speak of the inherent risk this poses in failing properly to address the problem of reoffending as a result of prioritising profit over performance. Let us not forget that the current chief inspector of probation, Liz Calderbank, has raised her concern that the proposed move to a national commissioning structure will come at the expense of the local perspective, disrupting the many positive developments that continue to emerge from working in partnership, and disrupting successful partnerships with probation trusts.
The Government are keen to publicise the efficiency savings that their schedule of reforms could produce, with private companies being paid only if they successfully rehabilitate offenders, but this is not the whole story. I have already mentioned the Justice Secretary dodging the questions about what percentage of the contract payment will depend on results. Providers are likely to receive at least 90% of their fee, irrespective of whether they deliver as promised. I hope the Minister will reveal whether that is the case: is it 90%, more than 90% or less than 90%? This is not a payment-by-results model that could drive real improvement, and that is further reason to require full piloting.
That is far from the only concern. Lord Ramsbotham noted that, in a recent letter, details were revealed that indicated that results would be paid for after one year. No doubt that news was warmly welcomed among potential providers in the voluntary sector and the private sector; many of whom would find it difficult to sustain activities for longer without receiving payment. Reoffending rates have always been measured after two years, though, and it appears untimely to stipulate at this juncture that a decision be reached on the success of service provision after only one year. Indeed, if long-term behavioural change is the ultimate goal, an argument can be made for extending that period rather than reducing it, but financial necessity dictates a shift in the opposite direction. Should we really be designing our probation service by putting the rewards for delivery organisations first, rather than the rehabilitation of the offenders, the protection of the public and the needs of victims? To take that further, it is not clear what would happen were an offender to reoffend further down the line, after a payment was made to the provider.
I know that the extent of the Freedom of Information Act will be debated under clause 3, but I reference it now as we all know that private companies delivering public services are exempt from the Act’s requirements, so it is difficult to get detail on much of what they are up to—all the more reason for Parliament to determine the future shape of the probation service.
Casting further doubt on the efficiency of proposed reforms is the need to re-engineer about 2,000 IT packages to allow the operation of the newly created entities. We all know that neither Government nor the Ministry of Justice have positive track records when dealing with IT packages. We need look no further than the reported troubles that slowed the roll-out of universal credit so significantly, the language service contracts I mentioned, or indeed the major problems encountered with the current probation programmes.
It is difficult to find faith in the Department’s ability to co-ordinate so many changes in such a short space of time, particularly when officials from the Ministry of Justice admitted that the complexity of closing down all these systems and moving to a shared systems approach will present a considerable challenge. The task is not made any easier when we remember that the umbrella requirement for the changes is that they must all be delivered without materially impacting on business as usual. I am not convinced that that is possible, and the Ministry of Justice’s risk register confirms a more than 80% likelihood that an unacceptable drop in operational performance during the programme will lead not only to reputational damage for the probation service, but to delivery failures. That, in my eyes, is certainly not a risk worth taking.
In case there is any doubt, that view is shared by many senior professionals in the sector who have many years of first-hand experience in probation and understand the intricacies of service provision in this area. Robin Verso, the Warwickshire probation trust chairman, advised the Secretary of State that the risks involved in the current timetable will see performance damaged and an increase in public protection failures. Gillian Wilmot, chair of the Derbyshire probation trust, spelled out fears that fragmentation of the probation service will lead to more systematic risks and more preventable serious attacks and deaths. Jane Wilson, chair of the Leicestershire and Rutland probation trust, similarly warns that the current timetable will seriously impact on service delivery and increase risks to public safety. Yes, they may have a vested interest, but I do not view their comments with any cynicism. They passionately believe in the probation service and want to see the best for both offenders and our communities.
What I hope has been borne out from what I said is that we are talking about the delivery of a public service that feeds directly into public safety. With that in mind, we have to ask how much risk we are willing to take in overhauling the service. I urge the Government to take a cautious approach. To shift responsibility for about 87% of the total offenders currently being supervised by the probation service to private sector organisations is a shift of monumental proportions and one that we cannot afford to take lightly, but as we have seen, the Secretary of State is determined to push ahead at breakneck speed while avoiding proper parliamentary scrutiny and, more importantly, neglecting to undertake sufficient piloting and to analyse carefully the results, to ensure that the reforms have been designed in a workable manner that will achieve the identified goals. There has been no testing, no costing and no evidence to support these radical changes, nor has there been any backing from the professional probation services, but that has not prevented the Justice Secretary from jumping the gun and issuing an invitation to tender for £450 million-worth of services before the Bill had its Second Reading.
Let me be clear: I am firmly behind action to reduce reoffending. That such action needs to be taken in some shape or form is incontrovertible. This is why I have welcomed the Government’s plans to extend probation services to those offenders sentenced to less than 12 months, who were previously left to their own devices. What I do not support, however, is the plan to do away with the local probation trust that allows services to adapt to specific local needs by commissioning those services that the trust sees fit to tackle the problems that it faces.
I take the opportunity to reiterate once more that clause 1 is not a party political move. On the contrary, it was inserted with Cross-Bench support in the other place, because too many unanswered questions remain about the Bill and the programme of privatisation. Many of these concerns relate directly to the payment by results model, which is untested anywhere in the world in this context. As a result, there is no evidence to support the claims of the Justice Secretary relating to its suitability—claims which effectively amount to pseudo-science, backed by his belief that they are right. Probation is a front-line service dealing with public safety on a daily basis and it deserves better.
I have questioned the rationale of the Government’s proposals and do not fully understand why they are trying to fragment the probation service while marginalising the role of the public sector. The probation service is arguably an example of good public service provision in an extremely difficult area, having managed to get reoffending rates down to 34.2% after a decade of steady year-on-year decline; at the same time, probation trusts have made savings of around 20% over the past five years and have helped to reduce crime rates while maintaining public protection. The Government’s proposals would put an end to these achievements, and the claimed benefits of the changes are backed up by gut feelings alone. The Minister’s own risk assessment confirmed that there is an 80% chance of a drop in operational performance and up to an 80% risk of failure of implementation; at the same time, there is an 80% risk of the cost saving not being met—an awful lot of 80%s there.
I fail to see why the Secretary of State is in such a rush to revolutionise a system that has displayed such promise and to displace it with a payment by results model that has failed so catastrophically elsewhere, while taking extraordinary risks with public safety. Parliament ought to have the right to scrutinise his proposals in detail through a proper process. I therefore support the clause.

Sarah Champion: It is a pleasure to service under your chairmanship. This week I will be one year old as an MP. Is it because I am a newbie or because I am naïve or have not become jaded enough that I am genuinely shocked by the lack of scrutiny and by the speed and by the lack of discussion with which these measures are being pushed through? Were it not for the addition of clause 1, we would not be debating this at all. We are talking not about a light matter, but about 70% of the probation service going into private hands, which will have enormous consequences.

Andy Slaughter: Did I hear my hon. Friend right? “We” are debating? It appears to me that only one side is debating. I am sure that the Minister will condescend to speak to us in due course. Given that we have this opportunity and we are not under particular time pressure—I do not imagine that the Government Back Benchers have been told to keep quiet because we are filibustering—it seems shocking to me, and I know my hon. Friend agrees, that nobody on the Government side seems to care about this issue. Perhaps they are too embarrassed.

Sarah Champion: I have to agree with my hon. Friend. Unfortunately, we are having the debate and outside this place they are having the debate. The sadness comes from the fact that within this room we are not debating the measures, and if clause 1 is not allowed to stand, Parliament is not going to be able to debate this. I find that extremely challenging to the processes that we hold dear.
For that reason, I am speaking primarily in support of clause 1, but also in support of new clauses 1 and 2. It is vital that any changes to our probation service come before Parliament. Probation is a key component of our justice system; that it might be privatised without full debate and scrutiny is scandalous. A robust pilot is the very minimum needed to challenge and calm the concerns raised in this Committee and within the sector as a whole.
Before coming to the House, I worked in the voluntary sector. If we made any changes, we would present a marked-up range of recommendations, but that has not been done. One recommendation from me would have been to see whether existing trusts had the capacity to proceed with the scheme. That has not even been presented, which I find strange.
All 35 of our probation trusts are staffed by dedicated, hard-working probation officers. I have spent time with the impact team in Rotherham and was inspired by the team’s commitment to supporting offenders and their personal pride in preventing reoffending. That is typical of what we find across the country, and I fear that it will be destroyed if payment by results is introduced, as offenders will then become targets rather than individuals to be cared for.
After the probation service won an award for excellence in 2011, the hon. Member for Reigate (Mr Blunt), then the Minister with responsibility for prisons and probation, stated:
“This prestigious award recognises the professionalism of probation staff and the excellence of their work. This very public recognition of not just what they do but, perhaps more importantly, how well they do it, will be a source of pride for probation staff.”
I therefore find it extremely challenging that those staff will not even be allowed to tender for this opportunity.
According to a National Offender Management Service report published in July this year, quality of service, as measured by the probation trust rating system, was rated either good or exceptional in every single probation trust. Moreover, reoffending rates are falling: the latest statistics published by the Ministry of Justice show that the probation service has reduced reoffending to 5% below its target figure, continuing the downward trend in reoffending rates witnessed in recent years, such that rates of reoffending by all adult offenders in the community subject to probation supervision are at their lowest since 2007-08. In South Yorkshire, the figures are even better, at 13.4% below the target figure.
Reoffending rates are important, but they are not the only criterion for success. The probation service can boast that victim feedback has been positive in 98% of cases, that targets for completion on domestic violence interventions and court report time limits have been exceeded, and that completion targets were also met or exceeded in the vast majority of probation programmes. Moreover, the service has managed to achieve all that while making the considerable budgetary savings expected of it.

Lorely Burt: I am listening carefully to the hon. Lady’s speech. I hope that I have not become jaded either and am still capable of spirited discussion and debate. She says that the trusts are not allowed to tender, and several Opposition Members have echoed that theme. It is not true to say that individuals within trusts cannot tender; they can tender as mutuals, for example. I am sure that everyone would wish that such individuals’ tried and trusted skills and abilities, which have already been put to the test, be used within such organisations, but organisations funded by the taxpayer are not allowed to go out to private contract due to the element of risk to taxpayers’ money.

Nadine Dorries: Order. You are making a speech, not an intervention.

Lorely Burt: I am so sorry, Ms Dorries. That is my point, anyway.

Sarah Champion: I am glad that the hon. Lady is not jaded, and I hear everything she says. The fundamental problem is that those staff are clearly the best placed with the best skills to do this, but we would be asking them to run the service, as they do now, while developing a model of practice for six months’ time. It is just not realistic to ask them to put in that much time and resource. They are in full-time jobs, whereas private companies have lawyers and advisers to put packages together. It is not a level playing field. I would love to see that happen—perhaps one of the pilots could be a test of whether they can deliver the service for offenders with sentences of less than 12 months—but in reality, I do not think they have the capacity to put forward a worked-up, competitive tender while doing their real jobs.

Paul Goggins: My hon. Friend does the Committee a real service, because she is the first Committee member to mention victims of crime. She said that her probation trust exceeded 98% victim satisfaction, which is one of the newer responsibilities of the probation service. Will she develop her point about why it is important for the Committee to consider the impact of the changes on victims of crime?

Sarah Champion: I thank my right hon. Friend for that intervention. We are talking about preventing reoffending, which means preventing crimes against other people. I agree that victims ought to be at the centre of our discussions. Parliament needs to have a full discussion about this issue because we represent our constituents. At the moment, I feel that victims do not have a voice. The proposals are being rolled out without proper consultation and consideration of how they will affect offenders and victims.
It is astonishing that the Secretary of State for Justice plans to scrap the trust within a few short months and replace it with an entirely different system, most of which will be run by the private sector. In an echo of his disastrous Work programme, he intends to impose an untried and untested payment-by-results model on the probation service. I say “untested” advisedly, because his predecessor had every intention to test this model through a series of pilot programmes. However, one of the first decisions that the Secretary of State for Justice made when he was appointed was to expand payment by results across the whole of England and Wales without bothering to implement the remaining pilots or waiting for the results from the pilots that had been started. I cannot help but wonder whether that was because they may not have yielded the outcomes he wanted. That is why I am also in favour of new clauses 1 and 2. The only sensible way forward is to take a little time to have a properly worked-out pilot. I urge the Minister to take that on board and consider it seriously.
It is clear that the reforms are flawed, rushed and ill-conceived. I want to talk about five issues I have with them. First, the proposals mean that medium and low-risk offenders will be delegated to private contractors, while high-risk offenders will remain in public hands under the auspices of a new national probation service. One of the recurring challenges that the probation service currently faces is the need to respond instantly if the level of risk an offender presents increases. Clearly, if a medium-risk offender becomes a high-risk offender due to a change of circumstances, the public needs greater protection. Yet the Department is unwilling to say how many of the 260,000 offenders looked after by the probation service each year fall into each of those categories. Under the Secretary of State’s reforms, a change in the risk level would instantly require a transfer of responsibility from any of the 21 separate private contractors to the public sector to protect public safety. That is worrying, not only because it is bound to be a bureaucratic and cumbersome process, but because it is not clear whether agencies across the country will have access to consistent tools for calculating risk levels.
Moreover, there is a disincentive for private contractors to upgrade the risk level of offenders when their circumstances change. Payment-by-results money follows the offender, and contractors may avoid re-profiling medium-risk offenders as high risk if they would lose money. What steps will the Minister take to ensure that that does not happen? The flipside of that is that private contractors may wish to get rid of medium-risk offenders who are creating a lot of trouble for them by shoving them into a high-risk category, so their bottom line is not affected.
Secondly, in dividing the workload in this way, the proposals will allow cherry-picking by the private sector and will lead to a downgrading of the quality of support that medium and low-risk offenders get. As the National Audit Office has put it, the proposals
“could encourage providers to concentrate their efforts on the offenders least likely to reoffend and prevent them from working with the most prolific offenders”.
Part of the success of the probation service in reducing reoffending has been its use of more targeted interventions. A good example is how interventions for women are handled. These work well because they are small, local and holistic; they look at each woman as an individual with her own problems and needs, rather than as just another offender. Under the proposals, this type of niche service is likely to be lost altogether as the links between large prime contractors and smaller local providers, as we have seen with the Work programme, either break down over time or often do not emerge at all. Crucially though, these services are simply more expensive and as the proposals mean that it will become the probation provider rather then the court that decides the activities the offender should take part in, they will, from commercial necessity, prioritise the cheapest. This is why the Howard League is concerned that female offenders will suffer detrimental consequences for their safety, levels of offending and general health and well-being. There are many such local partnership working arrangements in place already, so will the Minister assure us now that participation in these partnerships will continue when the private sector is running the 21 community rehabilitation companies?
Thirdly, the programme is complex and fraught with logistical problems. To deliver the split described previously is one thing, but to deliver it by the end of March next year is simply foolhardy. We are talking about the reallocation of 20,000 staff into new roles in an organisation that have yet to be tendered for, the establishment of a new probation service within the civil service and the creation of support functions for all 22 new entities. Re-engineering the IT systems—some 2,000 IT packages, I understand—is, in itself, a formidable task.

Ian Paisley Jnr: Does the hon. Lady agree that proper vetting of anyone in the private sector is essential in this reorganisation? This is particularly relevant in Northern Ireland given the backgrounds of some people who want to work in this private sector. They may best be termed “poacher turned gamekeeper”.

Sarah Champion: I completely agree. It is of great concern. Later in the Bill we come to more specifics about people who are qualified to do the role or otherwise. I shall also come on to the bigger companies who are likely to tender for this, because there are questions around those as well.

Andy Slaughter: The hon. Gentleman has made a very good point about how recruitment is going to be undertaken. Will it be undertaken by the probation service directly, will it be by general advertisement, will it be from existing staff? I am particularly concerned—I do not know whether my hon. Friend shares my concern—

Nadine Dorries: Order. Keep to an intervention, please.

Andy Slaughter: I am particularly concerned that a lot of staff employed by the probation service are agency staff and do not therefore necessarily have the skills and training, even at the moment.

Sarah Champion: My hon. Friend raises a very good point. The problem is that we simply do not know the answer to that. I know that if we are looking at making staff redundancies there will be a three-month redundancy period and we are already getting terribly close to the time when we need to be issuing those notices. There are any number of issues around staff, as well as the other points that I am raising. Does the Minister agree that any drop in operational performance while all this is being rushed through will lead to delivery failures? Perhaps he will be able to alleviate my concerns by publishing his own strategic risk register, which I understand highlights this and numerous other areas in more detail.
My fourth point is about finances. The proposals necessitate wholesale reorganising of the probation and prison services and a lengthy and complex national tendering and contracting process, all of which will require significant investment. There is a concerning lack of information about the cost of the proposals. Despite the publication of several impact assessments the Ministry of Justice has yet to set out clearly the costs of the reforms and how they will be funded. The current budget for probation is approximately £800 million per year, suggesting a 10-year budget of £8 billion. The House of Commons Library has broadly estimated the 10-year value of outsourced probation costs as between £5 billion and £20 billion, which does not include the budget for the remaining public sector probation service. This suggests that a significant increase in costs is predicted, contrary to Ministry of Justice claims that the reforms are a cost-saving initiative. The Ministry of Justice also estimates that an additional 30,000 people each year will receive short prison sentences as a result of the reforms. Again, how is all this going to be paid for?
My fifth point deals with the issue of what sort of company might be tendering to run the new community rehabilitation programmes.

Sitting suspended for Divisions in the House.

On resuming—

Sarah Champion: Let me turn to what sort of body might tender to be a new community rehabilitation company. It was announced in July that internal findings in the Department had revealed “significant anomalies” in the billing practices of Serco and G4S that amounted to tens of millions of pounds of taxpayers’ money. That revelation led to a referral to the Serious Fraud Office, as well as a further more detailed audit of those companies’ activities. The result of the investigations is not expected for several months, but rather than rule out those firms from the bidding process, the pre-qualification questionnaire deadline has been delayed to give them a chance to tender. We therefore have a most outrageous contradiction. On the one hand, the Secretary of State will not delay his reforms when the people who run the service say that they would jeopardise public safety yet, on the other hand, the Department is perfectly happy to delay the tendering timetable to allow private companies that are under investigation by the Serious Fraud Office to get a look-in.
More worryingly, when the community rehabilitation companies are in the hands of those contractors, they will be able to use the excuse of commercial sensitivity to avoid scrutiny of their methods. Staff in the new national probation service could be covered by the Official Secrets Act and might not be able to speak out. Will the Minister therefore outline exactly what provisions he is making to ensure that high-quality rehabilitation services will persist, and that the new work forces will, in all cases, retain the same or better levels of professional competence and training as are now required?
I understand that the Justice Secretary has reminded senior staff in probation trusts that they have a duty to carry out the will of the Secretary of State and not to discuss issues around privatisation. Nevertheless, the chairs of the probation trusts of Derbyshire, Leicestershire and Warwickshire have written to warn of the dire consequences of rushing through the reform. I urge the Minister to listen to the people who best know and understand this service. These experts say that
“performance is bound to be damaged and that public protection failures will inevitably increase”.
They say that the fragmentation that the Minister proposes will lead to
“more systemic risks and more preventable serious attacks and deaths”.
They also say that the current timetable is
“unrealistic and unreasonable…with serious implications for service delivery and therefore increased risk to the public.”
The Government’s proposals are fundamentally flawed yet are being pushed through at a frightening pace. The probation service does not need to be privatised. If the process goes ahead, I fear that tailored local services will suffer, especially those for female offenders and those involving domestic violence cases. The public will face a greater security threat as a result. Even to consider selling the service to companies that are still being investigated by the Serious Fraud Office is simply beyond the pale, so I urge the Committee to support clause 1.

Paul Goggins: It is a pleasure to serve once again on a Committee with you in the Chair, Ms Dorries.
I would like to clear something up at the outset. In an intervention this morning, I described the Government’s approach to the reform of the probation service as “disingenuous”. I did so because I think that there has been a lack of candour, and a lack of information and clarity about the detail, but I did not mean to infer that the Minister serving on this Committee is any way disingenuous. He is a very effective, open and engaging Minister, and I am sure that he wants the best for the probation service.
Such has been the contribution of my colleagues, there is probably little left to add to the arguments, but I will have a go. I will start with a couple of comments about the amendment and new clauses before moving on to the wider issues, given that Mr Robertson ruled this morning that we should say what we have to say now because there will not be a stand part debate.
Amendment 51 is helpful. There was clearly a technical flaw in the amendment passed by the other place, although I am glad that it was passed, because that has given us the opportunity to scrutinise the Government’s overall proposals, which we might not otherwise have had. However, amendment 51 would improve the provision by focusing on the two aspects of the reform about which Members are most concerned: the “responsibilities of” and “contracts with” probation trusts. I compliment my hon. Friend the Member for Darlington on tabling the amendment. It serves the Committee well to focus on her proposed wording, and I shall certainly support the amendment.
My right hon. Friend the Member for Dwyfor Meirionnydd has done the Committee a great service by tabling new clauses 1 and 2. Given the substantial nature of the proposed changes, the idea of implementing them without having proper pilots is, frankly, ludicrous and very risky to public safety. Parliament should not be expected to pass legislation on reforms with such ill-defined details and costings. The Justice Secretary should be bringing to Parliament a properly worked-out scheme so that we can know exactly who will be delivering what and when, and for how much. Parliament should then be asked to approve the detailed proposals. I said that on Second Reading, and I still do not understand what the Justice Secretary is afraid of.
The Justice Secretary is utterly convinced that his approach is right and that it will work, so why does he not complete the details and then bring his proposals back to us? If they makes sense and he can show us evidence that his proposal will work, and if the detail is properly worked out, he ought to be confident that both Houses will support him. I am sceptical, but if he can show through pilots that the scheme can work, we could then consider his properly worked proposals.

Jenny Chapman: Does not my right hon. Friend find it strange that the Secretary of State, on his appointment, chose to cancel the pilots that had already begun? If they had continued, he could have had the best part of a year’s work to draw on in making his case.

Paul Goggins: I genuinely do not understand why the Justice Secretary cancelled those pilots. As my hon. Friend said, he would have had additional evidence on which to base his proposals. He has made much of the good yet limited pilots at Doncaster and Peterborough prisons, but he would have had much more evidence to use and argue with if he had let the pilots continue. If the Government want to proceed down their intended road, they should be piloting their scheme comprehensively in one part of the country to find out whether it works. If it worked, I would have to own up and say that while I had been sceptical, I now understood that this scheme would work and that I would support it. It is unfair of the Government simply to expect a blank cheque, however.
A great concern to me is that whenever an hon. Member has asked how much it will cost to supervise the 50,000 additional offenders after they have been released from their short prison sentence, the answer is that Ministers cannot tell us. They say they will pay for it from the savings generated through the contracts to supervise the 150,000 low to medium-risk offenders. That might or might not be true, but how can we know? How can Parliament be expected simply to take the Justice Secretary’s word that those savings will accrue in the way that he expects? It is unfair to expect Parliament to do that.
Clause 1 has now been added to the Bill, so the Justice Secretary ought to bring back the pilot, and then, if it works, implement a full national scheme, but Parliament should have the final say. In the end, we are talking about the safety of our constituents in the communities we represent. It is as simple as that.
The probation service has evolved over time, and we have heard references throughout today’s contributions to the different services it provides. If we go way back into the 19th century, the Church of England Temperance Society and other voluntary organisations appointed missionaries to the courts in London, and people were allowed out of prison on the condition that they reported to and were supervised by those missionaries. I am sure that the Minister would say that his reforms take the probation service back to such values. I do not underestimate the importance of the voluntary sector and its role in supporting offenders, because it has a crucial role to play. However, much has changed. My hon. Friend the Member for Rotherham rightly reminded us a few minutes ago about one of the important changes: the service to victims that the probation service now provides. We have perhaps heard too little about the impact of the proposals on victims. If an offender has served a prison sentence for a serious offence, the probation service informs the family of the victim of when the offender will come out, helps to prepare them for that and ensures that their views are known. That important role is a relatively new for the probation service.
I have been involved in the development of this aspect of policy for a while. In previous debates I said that, in 2003, the then Home Secretary, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), and I received a report from Lord Carter of Coles on the future of the prison and probation services. The report was controversial, but as Ministers we supported it.
The report called for three key things that have since been developed in a number of ways. The first was what was called “end-to-end management” of offenders, which was a call to ensure that the prison and probation services were more closely linked together—and, indeed, linked with wider elements of the criminal justice system, as there were far too many cracks and holes down which offenders fell. I compliment the Government on introducing a proposal that offers supervision to short-sentence prisoners, which is one of the biggest gaps. Short-sentence prisoners are one of the most difficult and chaotic groups of offenders with which to work, and the Government are right to do that. I just wish they were slightly more forthcoming about the cost of the measure and where the money will come from.
The second recommendation was a clear separation between the commissioners and providers of services, which we rightly see in other elements of public service. Lord Carter’s third recommendation, which we supported, was increased contestability in the provision of prison and probation services. At the time, that was not a popular policy with some of my colleagues, as I was reminded recently. My right hon. Friend the Member for Dwyfor Meirionnydd and I had some robust discussions about that in the past.
There has been much criticism of the private sector during our deliberations, but I am not opposed to either the private sector or the voluntary sector having a role in the delivery of probation and prison services. Indeed, through increased contestability, those sectors might play a bigger and more important part. I would argue—I think the Minister would agree—that, as a result of contestability, there have been financial savings and improvements in the running of prison services, so it has not all been doom and gloom. There have been benefits from contestability, and I am certainly not afraid of private sector involvement, although there are serious questions at the moment about two particular companies that are among the largest private providers of correctional services.
Those three elements—end-to-end offender management, separating the roles of commissioners and providers, and more contestability—eventually fed into the Offender Management Act 2007. I have quoted a speech by my noble Friend Baroness Scotland of Asthal who, as a Minister, was very closely associated with the reforms, as was my right hon. Friend the Member for Delyn (Mr Hanson), who led on the legislation effectively. It is clear to anyone who reads that Act that probation trusts were to be at the heart of the commissioning, as well as the provision, of probation services, which is right because probation trusts know their own area best.
Frankly, it is perfectly acceptable to have a range of providers of probation services, but that provision has to be properly co-ordinated. There are far too many outstanding questions about the Government’s reforms. Rushing reforms of such complexity, especially without the convincing evidence for which all Members have been calling, is playing fast and loose with public safety, which none of us wants.
The scale of the proposed change is enormous, as a number of hon. and right hon. Members have mentioned. My right hon. Friend the Member for Dwyfor Meirionnydd has already discussed the change in detail. Establishing a new national probation service which, of course, will have regional offices, will require a whole new structure, and new contracts will have to be awarded to cover 70% of the offenders who are currently supervised by the existing probation service.

Andy Slaughter: Does my right hon. Friend agree that the 30% figure sends out exactly the wrong signals? The body covering those 30% looks like a rump service, and the nationalised service will no longer have a local, flexible element. The process seems set up to fail.

Paul Goggins: I said on Second Reading, as I have elsewhere, that the Justice Secretary appears to be the only Minister I can recall who wants both to nationalise and privatise a public service at the same time. This will be a national organisation. It will have local offices and, obviously, people stationed in different locations, but it will be run from Whitehall. I do not think in this day and age that that is acceptable. After all, the Government pride themselves on their localism agenda, but this goes exactly in the opposite direction.

Jenny Chapman: My right hon. Friend has a great deal of ministerial experience. Does he suspect that the way in which this is developing—with a national service and local CRCs—is not what the Justice Secretary had in mind? He has been forced into having a national service to retain the highest risk offenders because of political necessity.

Paul Goggins: I am sure that my hon. Friend is on to something, because there is incredible risk here. The 30% will include very dangerous people, such as serious sex offenders and violent people. Some will be convicted terrorists under close supervision in the community, so the officers will be carrying out a highly specialised job. Drawing the specialism into the centre in such a way, even though the Justice Secretary may be trying to minimise risk and exposure, is a high-risk strategy.

Andy Slaughter: May I correct my right hon. Friend on one point? He says that the Government pride themselves on localism, but they are not localist. They pretend that they believe in localism, but what is happening with this policy is exactly the same as the situation with schools and with planning under the Department for Communities and Local Government: everything is being sucked into the centre and there is no local control. Again, the Government’s policy is top heavy and will not work.

Paul Goggins: I knew that my hon. Friend would find a better way of putting it than me. I said, perhaps slightly tongue in cheek, that this is a Government who pride themselves on localism, but they are going in entirely the opposite direction to pull all these things into the centre.
We must also consider the transfer of staff. Nearly 20,000 staff will have to be transferred, whether to the national probation service or to one of the new providers that will be contracted to deal with low and medium-risk offenders. Those staff will face uncertainty about their futures. People will have to be appointed to manage them when they are newly positioned in these organisations. About 220,000 offenders will have to be reallocated to either the low-risk or medium-risk categories, plus a further 50,000 who are expected to come into the process during the first year as part of the new supervision of short-sentence prisoners. I am told that about 500 premises belonging to the probation service will have to be allocated, but doing that in a matter of months is in itself a huge responsibility and a significant logistical task.
What will happen to the existing contracts of the probation service and the trusts? They will have to be renegotiated or ditched. People will have to make termination pay-offs and so on. As a number of my hon. Friends reminded us, the ICT systems that underpin the probation service and are absolutely essential to public safety will all have to be incorporated into the new set-up. We are not talking about doing that over a five-year time period, but in a matter of months, and I, for one, am deeply worried about that.
I remind the Committee that the reason why we are debating these issues is because of clause 1, which says that before any of the changes can come about, Ministers must come back and seek the approval of both Houses. We would want to test any proposition about which we have concerns. If the Minister wants to ditch clause 1, although I hope that even now he is considering his position on it, he needs to consider all these points. Without clause 1, hon. Members will not be able to ask such questions.
What are the costs of what is being proposed? We know that it cannot cost any more than at present, because the Department’s position is that it has to screw down costs and what it pays for services. I have been trying to work out the cumulative cost, but perhaps the Minister can help with that. As I understand it, the new contracts could cost anything up to £500 million. We have an ICT system that costs about £200 million to run, and we must also consider the additional 50,000 offenders who will be supervised for the first time. Even if the cost of supervising those offenders can be absorbed into current budgets, there is still the £13 million of additional costs that the Minister made clear will be needed to deal with the breach of orders, the court follow-up and so on.
We have not yet touched on the cost of the 70 resettlement prisons that the Minister is designing. I am interested in what he is doing—I think he is on to something—but costs associated with the preparation of prisoners for release will be linked into the probation proposal because providers will be involved on both sides of people leaving the prison gates. If Parliament is to be expected to support the Minister’s proposals, we need a much clearer picture of how much they will cost and where all the separate costs will fall.
Reference has been made to the concerns of police and crime commissioners. I am keen that the Government listen to their voices, because it was, after all, this Government who created PCCs. The commissioners have a valuable insight because they are at the head of the fight against crime and local strategies to deliver safe communities for our constituents. They conveyed their concerns in correspondence with the Justice Secretary in which they highlighted four particular areas. First, they say that taking out the probation trusts will remove at a stroke the organisation that is best able to understand the local problems in any particular area. Probation trusts are already involved in a whole series of partnerships with the police, voluntary organisations, the courts and others engaged in the criminal justice system. In other words, they are part of the local partnership to make our communities safer, yet they are just being removed. Police and crime commissioners are rightly concerned about that fact, so they are drawing attention to it.

Jenny Chapman: I know that the PCC in my area is so concerned that he is preparing to make a bid with the local council and employees of the local trust to provide these services which, if successful, may be a game changer in the way that we perceive the programme. That is, however, a very big if. The fact that they are prepared to put their own resources—we could argue that they would be better used elsewhere—into this project shows the real level of concern that exists.

Paul Goggins: My hon. Friend points out the clear concern in her constituency. I know of real concern in Greater Manchester, whose police and crime commissioner, Tony Lloyd—many of us know him well—is also worried about these developments.

Elfyn Llwyd: A fortnight or so ago, I shared a platform with a Conservative police and crime commissioner. He could not understand the need for this reform—he was wary of it and worried about it—so there is not really a political divide. He was an experienced justice of the peace, as well as a police and crime commissioner.

Paul Goggins: I am grateful to my right hon. Friend for that intervention. Has the Minister convened a meeting of police and crime commissioners—not just those who represent Labour, but Conservative PCCs and those of no particular political party—to get to grips with their real concerns and to listen to any suggestions? If the Minister could be persuaded to hold a pilot, perhaps my hon. Friend the Member for Darlington and her local police and crime commissioner could help the development of a model. We ought to know what the people who lead on our crime prevention strategies really think.

Jeremy Wright: I will talk about pilots at greater length later, but to respond to the right hon. Gentleman’s specific point, we have a reference group of PCCs—from all parties and none—who assist us by setting out the detail of what they think about the plans. We will continue to listen to what they say.

Paul Goggins: It is reassuring that there is at least a dialogue there. In that case, I am sure that some of my concerns were articulated to the Minister in those discussions.
A second area of concern is the well covered issue of the division between low, medium and high risk. It is a false division which flies in the face of the professional judgements that probation officers are making and has all kinds of practical difficulties. I note the positive answer the Minister gave about offenders increasing their risk by going to the national probation service and then not coming back. That offers a measure of reassurance, but it is artificial fix to a problem that goes much deeper. The Minister will need to focus on that.
That leads to the third concern, which is: who has overall responsibility for offenders in the community? Dividing this area up into private providers on the one hand and the national probation service on the other will create confusion. Somebody who looks it up might be able to find out which is the responsible body, but on a day-to-day basis, when police officers are policing our communities, they need to know readily what the accountable body is. Because of the separation, that will not always be clear. The fourth point—it is the one we have all repeated ad nauseam—concerns the speed with which these reforms are being taken through and the problems this will create in terms of instability and uncertainty.
I come now to what I think is on everybody’s mind at the moment, namely G4S and Serco, the two large providers of private correctional services, which are really in turmoil at the moment. That must be causing great anxiety for the Minister, because these are two major providers. They would be expected to be major bidders for the probation contracts, yet they are in crisis at the moment, and all kinds of questions are arising from that. Let us go through what has happened—if I get any of this wrong, I am sure the Minister will be quick to correct me. As I understand it, the Justice Secretary called in PricewaterhouseCoopers to do an audit because concerns had been raised with him—he had seen things that caused him concern. It did the audit, and as a result of what it found, the Justice Secretary quite rightly came to the House on 11 July to say that he was deeply concerned. He said that he was making arrangements for the Government’s own audit to be carried out—I think by the Cabinet Office—and, at the same time, was alerting the Serious Fraud Office to the possibility that there had been criminal wrongdoing. I complimented the Justice Secretary at the time—I was there for the statement. He behaved in completely the right way and completely responsibly.
At the start of November, we learned that the Serious Fraud Office was opening this matter up as a criminal investigation, so clearly the concern was deepening. Last week—I think on Tuesday—G4S admitted it had been overcharging. It had done its own internal audit and, I think, offered to repay £24 million to the Ministry of Justice. Quite understandably, the Ministry of Justice said, “No, not at this stage, thank you. We’ll see what our own audit brings up. It might be a bigger figure, and we’ll have to see what comes out of that”. On Friday, the Justice Secretary announced that even though Serco had been the lead bidder for the contract for the three south Yorkshire prisons, it would not be awarded the contract, which would instead remain in the public sector instead.
Again, it is hard to know at this stage precisely why that decision was taken—we have not had a ministerial statement, unless I missed it, and we have certainly not had an oral statement in the House, although I am sure the Minister will clear the matter up—but all the comments seemed to indicate that this was all tied up with delays linked to the ongoing investigations into G4S and Serco. Perhaps the Minister can clarify that.

Andy Slaughter: My right hon. Friend is being generous to the Government in relation to their approach, so let me give an alternative view. Are the Secretary of State’s protestations not rather undermined by what the Cabinet Office Minister is saying, which is that he expects Serco and G4S to emerge “renewed and stronger”? In other words, either the Government are so dependent on those companies that they cannot let them go or they are taking a rather blasé attitude to them.

Paul Goggins: Those comments about “renewed and stronger” are interesting when one reflects on the fact that in the past days and weeks, Serco Group’s chief executive Chris Hyman has left his post, Serco UK and Europe’s chief executive Jeremy Stafford has resigned and G4S UK’s chief executive Richard Morris, who was responsible for personally overseeing the electronic monitoring contracts, has also gone. People right at the top of those organisations have gone, a Serious Fraud Office investigation is ongoing and is likely to take some time, one of the companies has admitted it was overcharging and offered to repay, and the outstanding audit run by the Cabinet Office is still ongoing.

Andy Slaughter: Does my right hon. Friend agree—the Minister might want to comment as well—that this is just cosmetic? In getting rid of Mr Stafford, Serco said it was
“working hard to refresh its relationship with central Government in the UK.”
In other words, “Let’s sacrifice a few people, pay them off handsomely, and then do business as usual.”

Paul Goggins: My hon. Friend is making a powerful point, and making it well.
The reason why I have raised this issue is that I want the Minister to address the following question when he responds, as I am sure he will: at what point would a decision be made to exclude G4S and Serco from the bidding process for the award of probation contracts under the reforms he proposes? I was pleased to hear him say towards the end of his speech on Second Reading that
“if Serco and G4S do not come out satisfactorily from the audit processes, which this Government instituted, they will not receive any contracts.”—[Official Report, 11 November 2013; Vol. 570, c. 744.]
That was a clear indication that there would be a cut-off point beyond which those companies would not be allowed to bid, but the Minister must explain what exactly he means by
“the audit processes which this Government instituted”.
Does that mean the internal Government audit being carried out by the Cabinet Office? I understand that it could report soon, which is why I asked the question that I asked in the debate on the programme motion. If there are any developments, the Committee needs to know as soon as possible.
Or was the Minister referring to the fact that the Justice Secretary initially referred the matter to the Serious Fraud Office? Did he mean that investigative audit process? If so, that could take years, and it is of absolutely no help to us whatever in considering the probation contracts that he will let in the next year or so. We need clarity. I hope that the Minister will be able to tell us that the process to which he referred is the Government’s own process and that when the Cabinet Office process concludes and reports, it will be clearer whether G4S and Serco will be allowed to bid.
Why am I singling out those two companies? They are two of the largest service providers and, in all the circumstances, given what the Government propose to do, the idea that G4S and Serco would not be involved in bidding for and running many of those services is unthinkable. They provide a lot of the capacity in the private sector. Therefore, I argue that if they are not allowed to be part of the process, it will take away a leg from the policy proposed by the Government, who would then be forced to go down the road of a pilot project, because frankly the capacity would not be there to run the system on a national scale.
It is all very well for the Justice Secretary to say that he will battle on and that this will mean that more people will be able to bid and become providers, but there is a serious question about the capacity to provide services. I am sure that the Minister will want to say more about that when he responds.

Sarah Champion: On that point, would it be possible for the existing probation trusts to run the under 12 months pilot, to see whether that is an acceptable way forward? I agree with my right hon. Friend. I cannot see who else in the market could provide those services if those two companies were removed.

Paul Goggins: Absolutely. If there were to be one pilot, I would hope that an existing, high-performing probation trust would be given the opportunity to become a pilot area. There may be more than one pilot, which would extend the options. I cannot understand why any Government would want to remove probation trusts from the scene having established them, improved their performance and put them at the heart of local partnerships, where they have helped to drive down offending and reoffending. That seems incredible.

Alex Cunningham: My hon. Friend talks of partnerships and the role of probation. I chaired the Children’s Trust when it was founded in Stockton-on-Tees. The probation service was a tremendous partner in that—good attenders and they even put their hand in their pocket to meet some of the costs. I wonder what role the Government foresee for a private provider. Will they join the Children’s Trust board in the same way, or are we going to lose the togetherness we have in our local society?

Paul Goggins: My hon. Friend makes a good practical point about local partnerships and where new private or voluntary providers would fit in. It is not clear how they would fit in. We heard earlier about problems of information sharing and building up trust and confidence. Why do that when there is already an organisation in place that has those established relationships? My hon. Friend makes a powerful point.
I have spoken long enough and intend to sit down soon, but first, let me just add to the concerns and questions I have raised by emphasising two or three points. Much has been made of the role of voluntary organisations. I support their role in our prisons and in the delivery of probation services. They already do a fine job. The danger is that many of them feel that they will be squeezed out and excluded by the ongoing bidding process. I co-chair the all-party group on penal affairs with Lord Ramsbotham, who was the prime mover of clause 1. Such is the level of concern brought to our attention, we are having a meeting next week to listen to voluntary organisations and their concerns. There is a real concern that far from expanding their role, what the Government propose could constrict it for some of them.
I debated uptariffing with the Minister on Second Reading. He reassured me that he is having extensive discussions with magistrates and the Sentencing Council. I was reassured by that, but there is a real danger that magistrates might be tempted to add on the extra bit of custody to the community sentence. If the Minister has anything to add, it would be helpful.
I will not dwell on the payment by results model, of which others have spoken. It looks to me increasingly like straight privatisation rather than a payment by results model that we would recognise, with very small amounts reckoned to be paid out to providers on completion of their targets. That is a real worry. We would be pleased to hear anything the Minister can tell us about the model for payment by results and what it is likely to look like.
I will conclude by saying what the Opposition want. The right hon. Member for Dwyfor Meirionnydd and my hon. Friend the Member for Darlington made the point plain this morning, and I emphasised it in an intervention, that while we have major reservations about what the Government propose, they are the Government and it is their right to bring forward proposals and test the will of the House. As much as we have reservations about their proposals, if they were prepared to pilot and properly evaluate them and bring forward the evidence, we would be forced to look again and test our assumptions and judgments. I simply ask the Minister, even at this late stage, to consider that approach. It would minimise the risk to the public and build important consensus around the delivery of probation and prison services.

Jeremy Wright: It is a pleasure to see you in the chair, Ms Dorries. I am grateful to all Members who have spoken in this well-balanced debate, and I entirely understand the genuine concerns expressed. Having said that, I am afraid I am not persuaded that the amendment should be supported or that clause 1 should stay part of the Bill, and I would like to explain why.
I want to do two things in the course of my remarks about why clause 1 should not remain in the Bill and why I cannot accept the amendments. I will first explain in some detail the reforms to probation and rehabilitation that we intend to make, because I think there are some misunderstandings, not necessarily from members of the Committee, but more broadly, about what we are trying to do. I also want to remind the Committee of the legislative basis for our reforms, because there is a little amnesia on the Opposition Benches about what has already been passed and what it gives this Government the opportunity to do. It is therefore necessary to look at the Offender Management Act 2007, which is entirely relevant to the amendments before us—both amendment 51 and the new clauses.
I will start by quoting again—I make no apologies for doing so, because it is the crucial part of the Act—from section 3(2) of the Offender Management Act. It says:
“The Secretary of State may make contractual or other arrangements with any other person for the making of the probation provision”.
I have heard many Opposition members of the Committee make the point that this Government have misunderstood what that Act was all about. They claim that it was all about the delivery of services through probation trusts. I have to repeat that the fact remains that the power that they legislated for is clear and unambiguous: contractual or other arrangements may be made with any other person; not solely with probation trusts, not solely with trusts commissioning other providers, but with any other person.

Sarah Champion: I really do not want to repeat this yet again—I think it is the fourth time that we have had this exchange—but the Minister should not explain this as a statement of fact, because it is open to dispute. We completely disagree with the position that the Minister takes on that specific piece of information. As he knows, there will be judicial review and he should not present this as something that is beyond dispute.

Jeremy Wright: What is absolutely beyond dispute is what is in the Offender Management Act. What I have just read out is exactly what section 3(2) of the Act says. If she disputes that, I am happy to compare her copy of the Offender Management Act with mine. That is clearly what it says.

Andy Slaughter: The Minister is diminishing his argument. He is being very pettifogging about this. The same arguments have been made for lots of pieces of legislation. The same argument could have been made about a lot of what was in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, when it was going through, but that was properly scrutinised over nearly a year. This is such fundamental change, more fundamental than what is in the Bill, that the Government should have brought this before the House. Whether it can get away with it, is a different issue, as the Minister is arguing, but it should have brought this before the House.

Jeremy Wright: The hon. Gentleman is wrong. This is a discussion about whether there is a need for this Bill to be changed to allow for further parliamentary scrutiny or for piloting. The point I am trying to make is that the authority to do what we are doing is very clearly set out in the Offender Management Act. I will come on in a little more detail to explain why it is that I do not believe that this is an accident or that the drafters of the Offender Management Act did not quite understand what they were doing. I think it is very clear that what the Offender Management Act gives licence to do is very much along the lines of what we are doing. As I will explain, it actually gives us licence to do more than what we are doing. I do not think that that is an accident.

Sarah Champion: I must take exception to what the Minister has said. It has been made very clear that that is not what that Act is intended to be used for. The provision to which the Minister repeatedly refers was intended to deal with a situation where a trust was failing—the Act-created trust. It was not intended to be used to abolish trusts. It is very clear.

Jeremy Wright: The quote that I have just given is from section 3(2). That section is headed “Power to make arrangements for the provision of probation services”. The comments that I made to the hon. Lady this morning were in relation to a different section, section 5, which is headed “Power to establish probation trusts”; it is a different point. I am talking about the power of the Secretary of State to make arrangements with those who are not probations trusts—indeed, those who are not in the public sector—to provide probation services. That power was clearly and unambiguously given to the Secretary of State in the Offender Management Act. Today’s Labour party may regret having done that, but in 2007 the Labour Government did that without ambiguity.

Elfyn Llwyd: The points that the Minister is making are likely to fall within the doctrine of Pepper v. Hart, and people in other places will pore over what he has said. Earlier, he coupled his non-acceptance of amendment 51 with my new clauses. Where in the Offender Management Act does it say that potentially dangerous changes to the law should never be piloted?

Jeremy Wright: The point is rather the opposite. Where does it say in the Offender Management Act that those things should be piloted?
Let me deal with the right hon. Gentleman’s point about Pepper v. Hart. He is a good lawyer, so he may know this better than I, but my understanding of Pepper v. Hart—in other words, reference to Hansardon the passage of an Act—is that it is of assistance to the courts when an Act is not clear. It is my contention that this Act could not be clearer. It is there in black and white that the previous Government decided that it is appropriate for the Secretary of State to have the power to contract for probation services “with any other person”. It does not say “any other person in the public sector”.
Since the right hon. Gentleman has raised the issue of Hansard and Pepper v. Hart, let me give some context. The noble Lord Reid, the then Secretary of State, on Second Reading in the Commons said:
“The Secretary of State, not the probation boards”—
as they were then called—
“will be responsible for ensuring service provision by entering into contracts with the public, private or voluntary sectors.”—[Official Report, 11 December 2006; Vol. 454, c. 593.]
The right hon. Gentleman referred to what Baroness Scotland said in the other place. She also spoke about the issue of whether there should be central or local commissioning, which is something that he and others have spoken about. On Report in the other place, she said:
“It places the statutory duty with the Secretary of State, who then commissions the majority of services through a lead provider—a lead local provider.”—[Official Report, House of Lords, 27 June 2007; Vol. 693, c. 639.]
Again, the Bill makes it clear that it is for the Secretary of State to do the commissioning if he so chooses, not for probation trusts.
The other interesting point, when one looks at the passage of the Offender Management Act in Hansard, is that it is clear that the previous Government did not take the view that lead providers would be only from the public sector for perpetuity. In fact, they said that the guarantee that lead providers would be from the public sector would last for a short period only. On Third Reading, the then Secretary of State said:
“I can therefore give an assurance today…that the core offender management tasks of the probation service—for example, offender report writing, offender supervision and breach proceedings—will remain in the public sector for the next three years.”—[Official Report, 28 February 2007; Vol. 1023, c. 457.]
He did not say “forever”, but
“for the next three years.”
It is of note that he included three things in his description. We do not intend our reforms to move the responsibility for offender report writing and breach proceedings from the public sector to the private sector. However, the then Secretary of State made it clear that there was no guarantee that offender supervision would not move to the private sector after those three years were up. My final point is that nothing in the 2007 Act requires Parliament to approve the Secretary of State’s proposal to commission services involving the supervision of offenders from any other person.

Andy Slaughter: Where does the Minister find, either in the Act or in Hansard, that what was envisaged was the wholesale privatisation, without the public sector having permission to bid, of 70% of the service?

Jeremy Wright: The hon. Gentleman makes an interesting point. What we propose to do is to contract out the supervision of medium and low-risk offenders. What it would seem that the then Secretary of State had in mind in 2007 was the contracting out potentially of all offender management for all offenders. It is therefore interesting that, given the opportunity to do so, the previous Labour Government did not restrict the possible outsourcing of offender management to contracted-out providers. They did not say, as we are, that there is merit in higher-risk offenders being retained by the public sector. They said that they could give reassurances for three years—no doubt, for the reasons to which the right hon. Member for Dwyfor Meirionnydd adverted of internal party management. The Secretary of State promised that offender management would not be privatised before the 2010 election, but he made no guarantees thereafter. The Committee will have noted that we are now more than three years on from 2007. It is therefore worth reminding ourselves of what actually happened in the Offender Management Act 2007.

Andy Slaughter: I am grateful to the Minister for confirming that there is no authority in the 2007 Act or Hansard for what he is saying. I suggest, although I know no more than he what was in the mind of Lord Reid at the time, that what, at best, was countenanced would be a mixed economy and not the extreme ideological lengths that this Government go to of not allowing any public sector bids.

Jeremy Wright: We again need to return to the point. At this stage, we are discussing whether it is necessary to allow for a further opportunity for Parliament to halt the reforms. Again, it is clear from looking at not only the text of the Offender Management Act 2007, but also the accompanying Hansard that what was envisioned was clear and that there was no doubt in the minds of those who were discussing the 2007 Act that the contracting out of offender management could be under discussion. I repeat that no restriction was placed on possible contracting out in the 2007 Act, but we intend to restrict it.

Jenny Chapman: It clear that there is a fundamental dispute over this point. The Minister knows that there is to be an application for judicial review, so, just to make the Committee aware, what effect might that have on the progress of the Minister’s plans?

Jeremy Wright: As the hon. Lady would expect, I cannot possibly speculate on a judicial review application that I have not seen and that may or may not happen. I struggle to see, however, exactly what that judicial review intends to cover. I have read to the Committee exactly what the Offender Management Act 2007 states and the quotes from Hansard demonstrate pretty clearly what was in the mind of the then Secretary of State. If there is to be a judicial review, it will no doubt be heard in the appropriate way.
We are dealing with clause 1, the amendment and new clauses, so let me say something about clause 1. It is recognised, not least by the hon. Lady, that clause 1 is simply too broad. It says that Parliament should have a say in almost any change to a probation arrangement, which is clearly not sensible. To be fair to the hon. Lady, she accepts that and amendment 51 is designed to remedy that issue. However, the amendment does not deal with my point about the Offender Management Act 2007. It does not deal with the fact that, in 2007, Parliament did not legislate for any such further check by Parliament, which is highly relevant to what we need to consider.
Unfortunately, that is not all that is wrong with amendment 51, which would still make it difficult for even existing trusts to operate. It would mean, for example, that small changes to current contracts, which do happen now, would require parliamentary approval. With 35 trusts and 35 contracts, the amendment would result in more bureaucracy and more delays in ensuring that offenders are managed in the community, as we all want to see. Let me illustrate that point with some recent changes made to current contracts. Several changes have been made to allow staff to be seconded from and to probation trusts. Would those secondments need the approval of Parliament? A small change to the arrangements for an attendance centre in one trust area meant a change to a contract, the value of which was £95. Does the hon. Lady want Parliament to approve such matters?

Jenny Chapman: As the Minister knows, clause 1 was included out of sheer frustration at the Government not allowing any opportunity to debate wholesale reform of the service in either House. We really should not need clause 1. He has been very creative in finding ways in which it is deficient, and it would have been better had we not had to have clause 1 at all, but since we are forced to have it, we would like to keep it there.

Jeremy Wright: I am saying what I think is wrong with amendment 51. I do not know how much frustration the hon. Lady felt when she wrote that, but we should make sure that when we draft amendments they do the job that we intend and do not have adverse consequences. I am pointing out that there are problems with this amendment, which is why the Government cannot accept it. For example, the effect of amendment 51 is also unclear. What do “the responsibilities of probation trusts” cover? Does it mean only the purposes of the trusts, or does it go wider and cover details such as the current statutory responsibilities—for example, the duty- to inform offenders where and to whom they must report? Is it the intention of the Opposition that this level of detail should be subject to parliamentary scrutiny?

Jenny Chapman: It is, obviously.

Jeremy Wright: If it is, and the hon. Lady says that it is, it is impractical, I fear, because it would curtail the ability of the trust to take on new responsibilities in the light of any legislative changes to the sentencing and supervision of offenders. So I cannot accept that amendment 51 is a sensible addition to the clause.
I talked about parliamentary approval in more general terms in connection with the Offender Management Act 2007. It is not, of course, the case that when the 2007 Act was being considered parliamentary approval was forgotten about. Indeed parliamentary approval is required for a change to section 4 of that Act, which was added to the Bill at a late stage and which ring-fences the provision of advice to courts to the public sector. Section 15 of the 2007 Act provides a power to repeal section 4 by order, but only with the approval of both Houses, so, in that set of circumstances, those drafting the 2007 Act thought it appropriate to have a mechanism for further parliamentary approval. It follows by implication, of course, that in all other respects they did not think that that was appropriate, so the existence of that power demonstrates, I suggest, that those who were taking the 2007 Act through this House and the other place decided that it was not appropriate to do what the hon. Lady and her colleagues are now asking us to do.
It is also perhaps worth mentioning that the fact that they had constructed a parliamentary process to allow section 4, which ring-fences the provision of advice to courts to the public sector, to be repealed suggests that they were not eliminating that as a possible future change. Again, we are not proposing anything other than that the public sector should retain responsibility for advice to court.

Paul Goggins: I am listening carefully to the Minister. He knows why Lord Ramsbotham and others put clause 1 into the Bill. It was because the Justice Secretary is planning the biggest shake-up in probation in its 107-year history without any proper reference to Parliament. Will he address the issue of how he intends to involve Parliament in the detailed scrutiny of his proposals?

Jeremy Wright: I will come back to that, but the point I am making at the moment is about what the previous Government decided would be appropriate should significant changes to the probation service take place. The 2007 Act sets out what should and what should not need to happen if further changes are envisaged to the way probation is managed. Therefore, it would be quite wrong for this Committee to reach any conclusions on these amendments—or, indeed, on clause 1 as a whole—without recognising what happened in 2007.
Let me try to summarise where we got to with the 2007 Act. It seems to me that the position of the Labour party at that point was, first, that only advice to courts would be ring-fenced to the public sector; secondly, that that ring fence could be removed if necessary; thirdly that supervision of any offender could be competed outside the public sector; and, fourthly, that the public sector monopoly for lead providers would only be guaranteed for three years. That is what we must deduce from the passage of the 2007 Act and I suggest that the Committee contrast that with this Government’s position that not only advice to courts but also supervision of high-risk offenders will remain in the public sector.

Andy Slaughter: Even if the Minister is right about that, and I do not think he is, he is entirely missing the point. The Government’s new policy is a radical change and they ought to have the courage and the discipline to defend it in the House. It is a course of conduct; it is happening now with the transformation of legal aid and judicial review reforms. The Secretary of State does not have the will or the courage to come to the House and defend his own policies.

Jeremy Wright: I shall do exactly that and explain why we think our proposal is the right thing to do. It will of course be the third time I have done it: I have done it in an Opposition day debate and on Second Reading, and I shall do it again today. There is no reluctance on my part to defend what we are doing, and I am very happy to do it again.
It is the hon. Gentleman who is missing the point. The discussion of these amendments and this part of the Bill is about whether it is necessary and appropriate for Parliament to have a further say in significant changes to the probation service. I absolutely accept the point that the changes are significant. The point I am making is that back in 2007, significant changes to the probation service were at least envisaged—whether that Government intended to implement them is a moot point, but significant changes were envisaged—and given the opportunity to do so, the Labour Members legislating at that time decided not to impose restrictions. It is therefore odd for them to come here today and tell us that we should impose the things that they were unwilling to impose.
 Jenny Chapman  rose—

Jeremy Wright: One last time, before I move on.

Jenny Chapman: I am very grateful to the Minister. Does he not find it odd that in every debate we have had—Opposition day, Second Reading, and a whole day’s debate today—every contribution has been on clause 1? Obviously we disagree on the 2007 Act, but does he not accept that there is a huge desire within Parliament to get under the skin of the proposals and debate them properly? That is why it is appropriate to include the clause.

Jeremy Wright: As I have tried to explain, I do not think the clause should remain in the Bill. I will explain why I think our proposed general reforms are the right ones. The reason why we have not come to the House to seek legislative consent for the vast majority of what we wish to do— I am hopeful and optimistic that we might one day get on to the things that we do need legislative consent for—is that the Offender Management Act that the Labour Government passed gives us full authority to do them. There is no getting away from that, however hard the hon. Lady tries.
I will move on to talk about what the reforms are intended to do. As the hon. Lady said, the vast majority of the debate that has taken place, not only today but on other occasions, too, has focused on the generality of the reforms. It is right that I try to set out what we are doing and why. Let met start with the context of the reforms. Reoffending rates are where we begin. Again, there is general acceptance in Committee and indeed in the House that reoffending rates are too high. They have barely changed in the past decade, and I think that all hon. Members will agree that that is not what our constituents would wish to see unchanged.
The failure to lower reoffending rates to a significant extent comes in spite of a 70% increase in spending on probation services between 1998-99 and 2010-11. We all know that the cost of reoffending to victims and communities is particularly high—the hon. Member for Stockton North made this point. In addition to the physical and emotional trauma that it causes, there is the financial cost. As members of the Committee may know, the National Audit Office estimates that the total cost to the economy of crime committed by recent ex-prisoners is between £9.5 billion and £13 billion every year.
Like all Government Departments, as I think Members recognise, the Ministry of Justice is required to make significant savings by 2015. For the sake of brevity, I will not go into the reasons why the Government are so strapped for cash and whose fault that might be, but we are required to make savings none the less. Funding for the supervision of offenders is of the order of £800 million a year—a sizable proportion of the Ministry’s budget. We are faced with the challenge of trying to do better for less, so we have two choices. We can impose further cuts on the structures that we have, risking increases in reoffending and leaving short-sentence offenders—the most prolific of all offenders; the ones that we all agree need extra attention—without support after release. That is choice number one. Choice number two is that we can reform the system so that it provides more effective rehabilitation at better value to the taxpayer, in a way that is sustainable for the future and reinvests some of the savings in support of those under 12-month prisoners. Again, we all agree that this is a worthwhile objective. I make it clear that I do not doubt for a moment the sincerity of all those who said that this is our common aim.
I will also make this point, which I have said before and am happy to repeat. It is important that in my position I say this during the course of these debates. Nothing in these reforms seeks to diminish the excellent work done by people in probation trusts. I absolutely agree with the hon. Member for Rotherham, from going up and down the country meeting people working within probation, that many do an outstanding job. There is no contradiction between believing that this is the case and believing that significant reform is needed to bring reoffending rates down.

Sarah Champion: I thank the Minister for that and for sharing my enthusiasm for probation trusts. However, if 70% of his workload was taken away, he would take it as a personal criticism. I cannot see how the probation trusts can see otherwise.

Jeremy Wright: I would hope and expect that those who do such good work will be able to thrive and do even better under the new system. We seek to give those individuals even more latitude and professional discretion to do their good work. I do not see this as any contrast or conflict. However, we cannot create any sustainable system for the future with the delivery model that we have of 35 public sector probation trusts. It is interesting that the hon. Lady in many ways now accepts that and says that if she were in power she would not necessarily proceed with all 35 trusts and would make changes. That must be sensible.
What we want to do instead is bring in the best of the public, voluntary and private sectors to work with offenders and, as the right hon. Member for Wythenshawe and Sale East mentioned, to restructure the prison system at the same time to allow better continuity of support after release. These are not piecemeal changes, simply to allow the Ministry to live within its means for a few more years. They are an attempt to put probation services on a footing that is sustainable in the future and which has a chance of delivering further reductions in reoffending.
At the heart of our proposals is the aim to open up supervision of low and medium-risk offenders to a diverse range of new rehabilitation providers. As I said, the aim is to bring in the best of all sectors to support innovative approaches to addressing the causes of reoffending. To harness the innovation of a wide range of providers and thereby drive improvement in services was exactly the stated intention of the Offender Management Act 2007, which the Opposition now seem to wish to row back from. Twenty-one new community rehabilitation companies will be established across England and Wales, bringing in new ways of working. It is open to organisations from the private, voluntary and community sectors, as well as those currently working in probation trusts, to bid for those first tier contracts, That is very much the point that my hon. Friend the Member for Solihull made earlier. There is an opportunity for those who—as the hon. Lady and I agree—do good work within the probation trust, so they can continue to do it as part of a mutual or other special purpose vehicle.

Alex Cunningham: I take a quite simple approach to these things and wonder what professional value these private sector companies will bring to the probation service, other than their tremendous ability to drive down costs and terms and conditions and to make a good profit?

Jeremy Wright: The hon. Gentleman needs to see past his irrational hatred of the private sector. It is not the case that simply because someone who does a very good job now as a public sector probation worker and goes to work for a different type of employer will suddenly lose all their values and ethics and will be driven by their employer to behave differently. What the hon. Gentleman must bear in mind is that the system we are designing will allow anybody from the private sector to make a profit only if they succeed in bringing down reoffending. There is a clear motivation, but it is absolutely the motivation that we would want any probation provider to have, which is to bring down reoffending.
I said that mutuals are a way in which current probation trust staff can engage in this process. It is worth pointing out that a number of staff within probation trusts have formed mutuals and expressed an interest in bidding in the competition. The Cabinet Office has made available funding from its £10 million mutuals support programme, as well as access to coaching and capacity building from experienced commercial mentors and leaders in the field.
We want to ensure that smaller organisations from the voluntary and community sectors and social enterprises can also play a key role in delivering rehabilitation. They may do that as subcontractors forming part of fair and sustainable supply chains. A number of hon. Members mentioned their concerns about this on Second Reading and it has come up again here today. That is absolutely our concern too.
The Committee may like to know that in July the Ministry of Justice awarded £150,000 to the Association of Chief Executives of Voluntary Organisations to deliver a series of skills and information workshops aimed at supporting the voluntary sector and mutuals to compete for contracts and deliver services to cut reoffending. We have also run a registration process for the smaller providers, in order to maximise opportunities for them to be involved. During the tender evaluation phase we will require potential tier 1 providers to demonstrate their plans for delivering a fair and transparent selection and appointment process of smaller organisations.
We are looking to achieve best value for the taxpayer, but I stress that the competition for CRCs is not about going for the lowest possible price. Successful bidders will be those who can demonstrate that they will deliver high-quality, cost-effective services that bring new ideas to reduce reoffending.
Today many hon. Members have spoken about risk, and much has been made of the so-called leaked risk register. Simply observe this: this Government is far from unique in not disclosing risk registers. I suspect that future Governments—of whatever political colour—will take exactly the same view. As at the very least the right hon. Member for Wythenshawe and Sale East well knows, this is so that there is a space for discussion about policy development which is not compromised by information coming out in dribs and drabs, and potentially being misunderstood and taken out of context.
In this context, there is a real risk that it is not helpful to start listing percentages that are not about whether an effort has been made to mitigate a risk, but are simply about unmitigated risks. Of course, on all sorts of different enterprises, if no action at all were taken to mitigate a risk it would be at a very high level. That is in no way what we are proposing, as I have tried to explain.

Jenny Chapman: What the Minister is saying is helpful, and we accept to a point the reasons why the Government are not enthusiastic about publishing. However, the Minister knows that this register has been leaked, and he knows that there is a great deal of anxiety about what it contains and that certain percentages have been disclosed. The 80% drop in operational performance is the one at the front of my mind. Given that that information is now out there, will the Minister explain what it means? As he rightly points out, it has led to a great deal of confusion. Will he now take the opportunity to explain what an 80% drop in performance looks like?

Jeremy Wright: I am certainly not going to do that, because I do not expect to be looking at that here. It is very important that we understand that risks that are left unmitigated can be at very high levels, but that is absolutely not what the Government are proposing here. Regarding the reforms that we are pursuing, I am setting out—I hope in some detail—that we have considered these risks and that we have done something to mitigate those risks, so that they can be properly managed.
Let me come to the most obvious of them, the management of offender risk. This is a legitimate concern of those on the Committee and indeed those beyond. I absolutely understand and accept—and I hope have done so from the beginning—that risk is a dynamic concept. People do not remain within an initial risk category in every case, but it is worth making it clear that we are creating a new national probation service to directly manage all of those offenders who pose a high risk of serious harm, together with any other sexual or violent offenders subject to multiagency public protection arrangements —MAPPA.
Points have been made around whether or not it is sensible to have a national probation service. I would simply make an observation, which may be familiar to the right hon. Member for Wythenshawe and Sale East: there has been concern within the probation service for a very long time that it does not have parity with the Prison Service, which is a national organisation. There is considerable merit in having a national identity for the probation service, in order to raise the level of esteem in which those who work in that system are held. That is a worthwhile objective and the national probation service helps to give us that. It is also a good thing to have a concentration of specialism and expertise in the management of the most difficult and dangerous offenders, and that is what we will have.

Elfyn Llwyd: While the Minister is talking about risk, will he tell us how he would suggest one mitigates an aggressive timetable?

Jeremy Wright: One would have to accept that the risk of that timetable was unacceptably high. For reasons that I want to come on to, I do not accept that the risks of the timetable that we are pursuing are too high. It is a timetable that can be properly managed. It is certainly challenging—I have never denied that—but I do not believe that it is dangerous, and it can be achieved. I will come back to that in a little more detail, but I want to finish the point on risk and, particularly, changes in risk as that is a crucial part of our reforms.
It is important to recognise that at the start of an offender’s sentence, the national probation service—in other words, public sector probation officers—will make an initial assessment of the risk of causing serious harm posed by an offender. All offenders assessed as posing a high risk of serious harm at that point will be the responsibly of the NPS for the rest of their sentence.
For those who are assessed as low or medium-risk offenders by a public sector probation officer at the point of sentence, CRCs will be required to manage any risk of serious harm that the offender may present. They will be required to have appropriately trained staff and robust procedures for the management of cases where the risk of serious harm escalates to high during the course of the offender’s supervision. They will be contractually required to refer cases back to the NPS if they consider that the risk of serious harm may be escalating to high. The NPS will determine if the risk has escalated to high and, if so, will take over the management of the case. The decision-making capacity, therefore, remains with the national probation service.
Just to add, the NPS can also, at the point of allocation, identify specific circumstances which, should they materialise, could indicate a raised risk of serious harm. In those instances, the CRC will be required to refer the case back to the NPS for a review of the risk assessment when the risk factors identified have materialised.
I want so say something about through-the-gate support, which the right hon. Member for Wythenshawe and Sale East mentioned. He is right that that is an important part of our reforms. We are introducing new support for offenders through the gate from custody into the community. In custody, a new resettlement service will be provided for all offenders before they are released, tailored to their individual needs, which will likely include support in finding accommodation, family support, mentoring and financial advice.
Services in custody will be underpinned by changes to the way that the prison estate is organised. We will join together rehabilitation in custody and in the community through a new class of resettlement prisons so that, in most cases, the same professional who works with offenders in custody can continue that rehabilitation work in the community. The right hon. Gentleman asked, in particular, about the cost of that additional work. That will be included in the CRC contracts, so we expect CRCs to do that work.
I turn to the payment-by-results mechanisms and comments that hon. Members made about that. That includes the payment-by-results components that will encourage providers to focus on achieving reoffending reductions. The mechanism was developed on the basis that providers will be rewarded with success payments when they achieve an offender’s complete desistence from crime for a 12-month period. In answer to the hon. Member for Stockton North, who was concerned about whether that is the right period, the evidence shows us that most people who will reoffend do so within 12 months; that is why we use that as a measurement period. The payments will also take into account total number of reoffences committed by the cohort of offenders that providers are responsible for rehabilitating.

Alex Cunningham: The Minister said that most offenders who are likely to reoffend will do so within 12 months, but does he know what proportion that would be? If offenders reoffend beyond the 12-month period, are not the providers being let off the hook?

Jeremy Wright: I do not know that off hand; I will try to come back to the hon. Gentleman later with a precise figure, but certainly the majority of those who will reoffend do so within 12 months. Therefore, that has been for some time a recognised period over which reoffending is measured. I was talking about the perverse incentives, which hon. Members were perfectly legitimately concerned about in the context of a PBR mechanism. As I was explaining, we will develop a mix of—if the jargon can be forgiven—binary and frequency measures. Those will ensure that providers do not neglect the most difficult offenders and those who have already offended.
The hon. Member for Rotherham again raised the question about perverse incentives, either to move or wrongly retain those who should be moving from medium to high risk. There are two points to make. The first is to again repeat that the national probation service will make a decision here; it will not be for the CRC to decide whether someone has moved from medium to high risk. The NPS, of course, does not have any kind of financial incentive to make a decision one way or the other. The other point to make is that in relation to those CRCs that may take the view that it is better to move someone on and not worry about them anymore in case they do something terrible, will have to bear in mind that that individual will stay within its cohort for PBR purposes. In other words, should that individual reoffend, that will still cause the CRC to lose its success payment for that individual. There is no motivation for CRCs to move people who are awkward.

Jenny Chapman: The Minister is being generous in giving way. This is a point that worries me a great deal. From the way the Minister is explaining it, it appears to be getting really rather complicated. It is a concern that an NPS probation officer would be making a decision based on information that will—hopefully—be received from the CRC about an offender whom they may or may not have met. The issue is about how robust that process will be, because we are far from assured that that is going to be as reliable as we want it to be.

Jeremy Wright: First, I do not anticipate that the NPS assessment will be made solely on paper; I imagine that an NPS operative would want to see that individual face to face in order to make that judgment, but that would be for them to decide. Secondly, in relation to information transfer and communication, the hon. Lady is absolutely right—she and I have agreed on many previous occasions—that any system relies on good communication, and this system should rely on it too. That is, communication between those who work for CRCs and those who work for the NPS, just as now it relies on communication between individuals who work with the system as it is.

Jenny Chapman: What the Minister is saying is helpful, but he is playing down the importance of speed in these decisions. Sometimes something will happen and a decision will need to be made about risk almost instantly. If I understand what he says correctly, that is going to be more difficult in the future than it is at the moment.

Jeremy Wright: It is quite important in this context to bear in mind that what we believe would be the most sensible way of operating in many cases, would be for co-location to happen; in other words, CRCs and representatives of the NPS located in the same place. That is certainly what will happen in April when the initial transfer takes place—and I promise the right hon. Member for Wythenshawe and Sale East who is being very patient that I will come to this. We believe that it would be a sensible thing for CRCs and the NPS to consider in the longer term.
The Secretary of State’s vision of all of this has come in for some pretty heavy criticism in the course of the day, but it has to be said that in relation to what he has always said about this, that was the way in which he envisaged this system working. One of the reasons for that is precisely the point that the hon. Lady makes.

Sarah Champion: I am listening intently to what the Minister is saying, and it sounds as though we already have that within the probation trust.

Jeremy Wright: I am sorry, have what within the probation trust?

Sarah Champion: We have the co-location. We have the team all in one place so that they can share information immediately with each other. It sounds as though the Minister is reinventing what we have already got.

Jeremy Wright: As I hope I have indicated, there are certainly aspects of what goes on now that we would not wish to lose. However, the reason for the reforms that we are bringing in, is to enable us to release the savings that we need to pay for an additional 50,000 offenders. That is the fundamental point at work here. If we could do that by leaving probation trusts exactly as they are, of course we would have considered doing so. However, we do not believe that that is possible or feasible.
Let me move on because I am conscious that there are other points that I need to get to too. The payment-by-results pilots that have already taken place or are in progress have been talked about, particularly those at HMP Peterborough and Doncaster. The point has been made that these are prison-based pilots. In a way that is true, but certainly when one looks at the Peterborough pilot, its basis is that offenders who are in this sub-12-month category will be supported in the closing stages of their sentence and then for 12 months thereafter in the community. That is a fairly close approximation to what we are proposing to do. However, there is no doubt that our experience with those pilots—and with others—has increased our confidence about designing robust contracts that drive the required behaviours and help generate improved value for money.
Both CRCs and the NPS will be held to account by the existing National Offender Management Service, which will ensure that the overall system performs in line with the objectives and priorities set out by Ministers and the Ministry of Justice. Robust account management and performance measures set by NOMs will be combined with appropriate audit arrangements and inspections by HMI Probation to regulate the system. Again, I think it was the hon. Member for Stockton North who made the point that there are tough inspections already in place for probation and we expect them to apply equally to all providers of probation services from whichever sector they come.
I have been asked what happens in the event of failures. In the event of the failure of a complete provider, one of two things could happen. Either the Secretary of State could step in, or another provider could take over delivery. We will produce draft contracts early next year which will give a better indication of how that might be done.
I am not going to get away with speaking for this long on this subject without mentioning G4S and Serco. However, I am going to disappoint hon. and right hon. Members opposite because, as I said at the outset, there is a very limited amount that I can say. In relation to the specific point about what I have said before, it has been clear that, in relation to electronic-monitoring contracts, the original decision that Ministers in this Government took was that it was appropriate to begin an audit process. That is the audit process to which the right hon. Gentleman referred involving PwC. That process has been overtaken to some degree by the involvement of the Serious Fraud Office. I am sure that hon. and right hon. Members, if they are frank, will accept that there is a very limited amount that it would be sensible or appropriate for me as a Minister to say, given that there is an ongoing investigation. So, I am afraid that I will have to disappoint them that in relation to those companies there are very obvious restrictions on what it would be sensible to say. Much as I would love to help hon. Members opposite, they will understand those restrictions, I am sure.
 Several hon. Members  rose—

Jeremy Wright: I will give way to the right hon. Member for Dwyfor Meirionnydd.

Elfyn Llwyd: It is interesting, because we know that the monitoring contracts are to be increased rapidly. In the Government’s own impact assessment, electronic monitoring was stated as having a neutral effect on reoffending. I put this to the Secretary of State and evidently he had not even read that paragraph, so he was going for something that was not proven to make any difference whatsoever. Once more, he was throwing money at these people.

Jeremy Wright: Well, I do not entirely agree that these changes would make no difference. The right hon. Gentleman will recognise that what we are talking about in relation to new tagging contracts is also new technology. We are talking about GPS-based tags, rather than the previous radio frequency tags. He will recognise straight away that there is hugely greater potential to do more things with a GPS-based tag than with a radio frequency-based tag. That is why we think that there is huge potential for that technology. However, that is a separate question to what has previously happened in relation to other contracts, on which I am afraid I am going to say no more, but I will give the hon. Member for Darlington one more chance.

Jenny Chapman: I am grateful to the Minister for giving way. We respect his caution on this issue and have a huge amount of time on this side for this particular Minister. However, as an issue of principle, if an organisation is under criminal investigation, would not the Minister say that that would be an inappropriate organisation to contract with on this particular form of work?

Jeremy Wright: I am hugely grateful for the hon. Lady’s kind words, though they are doing me no end of harm in terms of career prospects. On the point she made, I can tell her this: there is absolutely no doubt that Government Members and Ministers are keen to maintain the integrity of all contracts entered into by the Government. However, for the reasons I have set out, I cannot go any further than that on those two companies. I am afraid that I must maintain that view, however hard she tries. I apologise to her.

Paul Goggins: The Minister is being clear and helpful to the Committee, and I hope I can press him to be a little clearer on this matter without making any judgment about G4S and Serco and their conduct. On Second Reading, he said that
“if Serco and G4S do not come out satisfactorily from the audit processes, which this Government instituted, they will not receive any contracts.”—[Official Report, 11 November 2013; Vol. 570, c. 744.]
The simple question is: at what point will he judge whether they have come out satisfactorily from the audit processes?

Jeremy Wright: I understand the right hon. Gentleman’s question and interest in this matter and he is perfectly right to probe me on it. He will recognise the difficulty I have, which is that if the audit processes we have set up were the only thing going on, what I said then would stand now. The difficulty is that there is not a clear demarcation, as I understand it, between the PwC audit and the SFO's processes. Because those two are now to some degree conflated, I have to be rather more reticent than I would otherwise have been.

Paul Goggins: The Minister is generous in giving way again. He made those comments on 11 November, which was after we all knew that the Serious Fraud Office had started a criminal investigation. He knew that then and that investigation is clearly ongoing. He was so clear on Second Reading that I ask him to say a little more.

Jeremy Wright: Again, I can make this much clear: if we were talking only about the audit processes that PwC had begun, then what I said on not giving contracts to anyone who does not come satisfactorily through that process would stand. The complicating factor is that, for reasons I think the right hon. Gentleman supports—and fairly supported at the time—we have had to engage the SFO in this matter. As a result, there are complications, and those have to be worked through, which makes it difficult for me to be as precise as I would ideally like to be.
On what we are doing to ensure that those delivering services have skilled and trained staff to work with offenders—that is a legitimate concern of those who have spoken—a partnership of the Probation Chiefs Association, the Probation Association, the National Association of Probation Officers and Unison is working with the Ministry of Justice to establish an independent probation institute. I mention that again because it is important that we refocus on how to raise the esteem of those engaged in probation and rehabilitation. Such a body has been asked for over a long period, and it is part of our reforms. It had sadly been overlooked before.
The institute will support the development of the probation profession through a voluntary register of practitioners that captures the qualifications, skills and experience of the work force. It will support continuing professional development and promote events that contribute to skills, growth and knowledge in that area. For the new CRCs, there will be a contractual requirement to have and maintain a work force with appropriate levels of training and competence. Bidders for the CRCs will need to demonstrate in bids how they will deliver that, both in the shorter and longer term.
The issue of local partnerships has been raised both in this House and in the other place. CRCs will clearly need to work effectively with the NPS and with other partner organisations. Contracts will require CRCs to participate in statutory partnerships, such as community safety partnerships. Bidders will also need to evidence how they will engage with other local non-statutory partnerships, such as existing integrated offender management arrangements, very much like the one the hon. Member for Rotherham described in her constituency, and those delivered by the police, probation and other organisations. In answer to the right hon. Member for Wythenshawe and Sale East, the local PCC will be a key partner. We will want to ensure that a local PCC’s police and crime plan is made available to all those interested in pursuing a contract, so that they understand and can work with the objectives of that PCC.

Jenny Chapman: Did I miss it, or did the Minister say that there is a duty to co-operate with these partnerships?

Jeremy Wright: There will be a duty to participate in those partnerships that are statutory. In relation to all others, we have to leave it to the common sense of those who will be engaged in this work to understand—as members of the Committee do, and as I think they all will—that those who do not work in partnership with other agencies are unlikely to secure their objective, which they will be incentivised to have, to reduce reoffending among their cohort. Again, I think we can rely on that happening.
NOMS will require CRCs to provide assurance of their engagement in local partnerships where those are purposeful in maintaining performance, and will take into consideration feedback from stakeholders such as PCCs and local authorities. As the right hon. Member for Wythenshawe and Sale East has made clear, the NPS will also be structured to allow for the best alignment with existing local delivery and partnership structures. The basic building blocks of the NPS structure will be local delivery units, based on local authority boundaries.
I turn now to new clauses 1 and 2, to which the right hon. Gentleman spoke. In his view, they are about the need to pilot and test before further action is taken. The difficulty with new clause 1 is that, in many ways, it comes too late. He seeks to prevent any tendering before further processes have taken place, but tendering has already begun. It began with the issue of the Official Journal of the European Union notice under the powers given by the Offender Management Act 2007. There is therefore a very real deficiency with new clause 1.
The difficulty with new clause 2 is very similar to the difficulty, as far as we see it, with new clause 1, which, as I outlined, is too broad. Like new clause 1, it refers to:
“Any proposed restructuring of the Probation Service”.
There is a real difficulty in that that could capture minor changes. I know the right hon. Gentleman does not have those in mind, but the new clause might well cover them if we passed it.
There is a question of delay. If we piloted extensively and in a way that recognised that the system we intend to put in place is based substantially on innovation and, therefore, on difference, we could legitimately pilot for ever and never actually decide to proceed with the reforms. For the reasons the right hon. Gentleman has heard me set out before, that is not an acceptable option. There is an urgency to these reforms, and that urgency is responding to the needs of victims of crime and potential victims of crime, which is substantially about reducing reoffending rates as fast as we can. I absolutely recognise that there will be disagreement in the Committee as to whether our proposals will be effective in achieving that objective, but he will recognise that, if that is our objective, and it is our sincere belief that the activity we propose is the best way to achieve it, we will not wish to delay that activity any longer than we should.
Let me deal with the specific accusation that nothing in the reforms has been or will be tested. We are working with 11 trusts to test key elements of the new model between now and next spring, and that includes the new risk-assessment tool and case allocation process. The arrangements for dealing with breach and recall to custody will include live tests, in which the new processes will be adopted and run in particular local delivery units. The first round of tests has now started.
We have also begun early reconfiguration of the prison estate in the north-west, which will enable us to work with the Department of Health to test joined-up through-the-gate treatment for prisoners with drug and alcohol addictions. Next spring, furthermore, the 21 CRCs and the NPS will be working alongside each other to deliver services. However, the CRCs will remain in public sector ownership for some months after that, until the conclusion of the competition, providing further opportunities to test and refine the system.
The right hon. Gentleman has asked a number of questions and made a number of points about the process of transferring staff to new employers, and the pace at which it is taking place. He will recognise—this point was recently made by the Chairman of the Justice Committee—that, if we proceed down that line, there is merit in not dragging our feet, so that individuals understand on which side of the line they will fall and have some certainty as to what their personal future will be. I can give the right hon. Gentleman a reassurance, which I hope will be helpful: the transfer to a CRC or to the NPS on the relevant date will be on current terms and conditions, pensions will be unaffected, and there will be no compulsory redundancies.
On the concern about case load, the right hon. Gentleman is right that it would be more than challenging to transfer every case to one or other side of the line by 1 April. For that reason—and we said this clearly to the trusts—where there is a case for doing so we shall give greater latitude to allow for case load transfer to operate more slowly than people transfer. I hope that that will avoid the disruption that he is legitimately concerned about, and the dangers that it might create.
We have also built into our plans a set of our own business and system-readiness tests, which will be carried out throughout the implementation process, and will check that the restructured business and its systems and support infrastructure, including shared services, are fit for purpose and ready to go live.
The hon. Member for Darlington is right to say that large-scale Government IT projects have not covered themselves in glory in recent years. However, I reassure her that CRCs will be required to update information on the existing case management system. I hope we will not see the attendant problems of a big, new IT system. 
I have discussed the reforms at some length precisely because I believe, as do the Justice Secretary and the Government, that it is vital for Parliament to engage with the detail. This House and the other place have had many chances to debate the reforms, such as an Opposition day and on Second Reading. The Opposition day motion and the Opposition’s reasoned amendment on Second Reading were defeated in the House.
There has been further considerable opportunity for discussion today, and, as I hope I have made clear, I am perfectly happy to discuss the detail. However, the Government have offered transparency to both Houses about the development of the reforms. There was extensive public consultation, as a result of which we amended key aspects of our plans. We placed copies of every document that we published on the detail of the reforms, such as the straw man payment mechanism and the detailed operating model, in the Libraries of both Houses. I have met several hon. Members to discuss the reforms, as has the Justice Secretary, and my ministerial colleague Lord McNally has done the same with a number of peers.
I go back, finally, to the fact that the Labour Government did not see fit to include a requirement in the Offender Management Act 2007 for the Secretary of State to consult, or lay information before, Parliament or any other body or person before making arrangements for probation services through the public, private or voluntary sectors, or indeed to pilot anything at all. It was open to them to propose that and it was open to either House to amend the Bill, which they did not do.
We have engaged in the ways I have described. That is a better way than the amendments and new clauses.

Jenny Chapman: I do not want to speak for too long, as we have spent most of the day on the issue, and most of the arguments that could be made have been made. The Minister must be speaking tongue-in-cheek when he says he believes it is vital for Parliament to exercise scrutiny of the measure, because every time we have had any debate, the Opposition have had to force it—sometimes, as he has observed, by being creative with the parliamentary process. That is not really how we want to go about things.
We are concerned about the misuse of process by which the reform is being introduced but, more importantly, we still have deep concerns about what the change will mean for offender management, supervision, victims and reoffending. We are not convinced that the Department has properly planned for what must now be the probability that things will go wrong. It has not had the opportunity to pilot the idea or to learn anything from mistakes.
The Minister says he plans to draft regulations to allow for taking over the running of CRCs, should they go wrong, but we have seen nothing of them—that is the first time I have heard such an assurance. We are not aware of any contingencies. As these sorts of outsourcing arrangements become more common and develop over the years, we become a bit more savvy and mindful, and more cautious about entering into what is likely to be a 10-year contract without having safeguards in mind. We still do not know what percentage of a contract will be paid on the basis of results, but we suspect that it is going to be a very small proportion and the Minister has said nothing to reassure us about that. We still believe that the Government are wasting an opportunity properly to work with and develop trusts that want to do this work—and, in many cases, are already doing it within existing budgets—and we still do not understand why the Government are hell-bent on abolishing trusts and pursuing this course of action.
If anything, the trusts have been a bit too guilty of keeping their heads down, being successful, meeting all their targets and getting on with their jobs. Perhaps if they had made a bit more fuss earlier and refused to make savings, or been a bit more catastrophic in the way they behaved, we might not be here, but they have done a very good job, and this is what they get for their efforts. We have made it clear that we do not oppose the involvement of the private sector per se, but we think that it is essential to have some form of local accountability. There is private sector involvement in health, for example, through health trusts. Academy schools contract with private sector providers all the time, but local accountability remains and we think that that matters.
The Minister is right that we should not need clause 1, but we do need it. We have had no other opportunity to go through the proposals, and today has been a very quick skip through all the issues. We should be spending sitting after sitting on what we have been debating today. We have carried out only a surface appraisal of some of the problems that we think exist within the Government’s proposals. That cannot be called scrutiny, and it is not what would be happening if their proposals had properly been part of the Bill.
The Minister says that he wants the best of all sectors. It is our opinion that organisations being investigated by the SFO do not represent the best of all sectors and he is unable to reassure us on that either, despite our couching our points in terms to which we feel he could have responded more fully. He has mentioned the co-location of the national probation service and CRCs a few times, but no one knows where the offices are going to be, who will be in them or how this will work. I do not think that the Minister really knows either. I think that the Secretary of State just said it off the cuff and now I assume that officials are diligently trying to work out where on earth these places are going to be.
We have deep concern about the situation with local partnerships. Such partnerships take a long time to develop and become successful, and they are fragile. I, too, chaired a children’s trust before coming to this place and it takes an awful lot to make these things work. Too often, partnerships do not work and are a waste of time, but when they do work, we get real savings and benefits in performance. One of the most precious things that will be lost through the change is the performance enhancement that we gain from local partnerships.
I have become more concerned than I was before after hearing the Minister’s explanation of how decisions on risk will be made—it sounds incredibly complicated. He has introduced uncertainty before he has even done anything. There will be increased complexity when finely balanced decisions are made about risk category, which will also have an effect on who will be supervising an offender. There will be additional bureaucracy and a gaping hole for offenders to fall into when communication gaps occur, as they will occur, and crimes will be committed as a consequence. The Minister knows this and for all these reasons, we have no option but to vote to keep clause 1 in the Bill.

Question put, That the amendment be made.

The Committee divided: Ayes 7, Noes 12.

Question accordingly negatived.

Elfyn Llwyd: On a point of order, Ms Dorries. Will you confirm that if I were minded to press new clause 1 and new clause 2 to a Division, that could be done at a later stage?

Nadine Dorries: Yes, you may do so later. Decisions on new clause 1 and new clause 2 cannot be taken until later in our proceedings.

Question put forthwith (Standing Orders Nos. 68 and 89), That the clause stand part of the Bill.

The Committee divided: Ayes 7, Noes 12.

Question accordingly negatived.

Clause 1 disagreed to.

Ordered, That further consideration be now adjourned.— (Mr Evennett.)

Adjourned till Thursday 28 November at half-past Eleven o’clock.